Page 1: Introduction
In the commercial world, organisations respond differently to outside events and the process of change. Some constantly seek opportunities for growth while others wait until changes are forced upon them. Some run out of energy and stagnate, while others develop and move forward in the face of stiffening competition. It is often said that ‘if you don’t think about the future, you won’t have one!’
Strategic planning is the process most successful companies embrace when determining the route to achieving their business objective. It is a powerful technique, which mobilises resources behind a plan and is one of the most important factors which distinguishes progressive organisations who have identified and communicated, externally and internally, the type of business they want to become. When Ford developed Ford 2000, it was accepted that the company, although successful, had reached a cross-roads. The business faced many challenges in a number of its competitive environments and required innovative solutions to boost global competitiveness, in order to sustain continuous growth.
Global Manufacturing Practices
There are some 600 million cars in use across the globe. Automobile production is the world’s largest manufacturing industry, with sales per annum of £350 billion. The industry supports jobs not only in automobile manufacture, but also in components, distribution, finance, insurance, repairs and maintenance, which in Europe alone amounts to 18 million jobs.
In recent years, the industry has been characterised by the global manufacturing practices of Japanese, Malaysian and Korean competitors, which have stimulated a series of innovative developments. A significant factor has been the adoption of lean production processes. ‘Lean production’ was first coined by researcher John Krafcik, who wrote that ‘lean production is lean because it aims to use less of everything’, compared to other forms of production. It resulted in fewer defects and fewer hours to develop products together with greater productivity and lower stock levels. The lean producer has therefore significant cost and marketing advantages, which reduce costs and improve choice.
The location of large new plants by Japanese companies on green field sites in the UK has added to the nature and type of competition. Such changes have created a need for companies like Ford to look again at their operations to view how they could improve their competitiveness in order to counter threats and reduce the performance gap between themselves and their global competitors.
Ford’s vision is ‘to be the world’s leading automotive company’. It is a management declaration of the direction the Company is taking and sends a clear message to customers, competitors, suppliers and shareholders. Ford’s vision doesn’t “mean the biggest; it means the best.” In Ford terms, leadership means ‘product excellence linked to being the best in customer satisfaction, value, cost and profitability’. In order to achieve this vision Ford 2000 set out seven strategies for leadership. These are:
Ford 2000 indicated that manufacturing plants could no longer be managed on a local basis and must become integrated into the new worldwide manufacturing strategy. The goal has been to focus every Ford resource and to use it more effectively to meet customer needs. It represents a different way of thinking allowing the pace of change to accelerate. According to Alex Trotman, the Ford Chairman, Ford 2000 will:
- provide economies of scale;
- create quantum improvements in processes;
- involve investment in Ford people;
- lead to worldwide adoption of the best practices at Ford;
- provide the shortest possible distance between good ideas and great products.
Having established the vision, Ford needed to communicate the strategic process into the organisation, in such a way that allowed operational divisions to embrace the principles and take ownership for their part in the overall plan. It was important to encourage operating units to develop their own mini-agendas which would fit into and be compatible with the Group’s overall vision. This case study focuses on how Ford Dagenham has adopted the
Ford 2000 ‘Strategies for Leadership’ to create their own strategy – Dagenham 2000 - which has enabled the development of its own plans to be a ‘centre of excellence’, within a world class manufacturer.
Located in Essex and not far from London, the history of Ford at Dagenham dates back to 1929, when Henry Ford’s son Edsel came to Britain to break the ground for the new Dagenham factory. Since 1931, when the first vehicle rolled off the production line and October 1996, more than 10 million vehicles have been manufactured at Dagenham. These numbers include classic names such as the Ford Eight, Anglia, Prefect, Consul, Zephyr, Zodiac, Cortina, Sierra, Corsair and the hugely successful Ford Fiesta.
The Dagenham estate comprises 1.75 square miles, incorporating 9.8 million square feet of production plant. The site is confined on all sides, which prohibit it from exacting some of the benefits true ‘greenfield’ sites have provided for its competitors such as Nissan and Honda. Dagenham has become the centre of world wide excellence for the Fiesta.